Settlement Agreement Solicitors

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As experienced Employment Law solicitors, we help both Employers and Employees with all that is related to settlement agreements, employment law, and the complexities of legally binding contracts.

Our team of solicitors is well versed in providing clients with the information and support they need, when they need it most.

In the case of settlement agreements, where both parties will need to be advised – our settlement agreement solicitors work with employers and employees to come to an agreement in the face of legal disputes at work or on termination of employment.

Any employee who is asked to sign a settlement agreement as a result of a dispute or a termination situation will be required to take legal advice on it. This means they can be safe in the knowledge that they are getting the correct outcome and understand the effect of what they are being asked to sign.

For employers, settlement agreements can protect them from being subject to claims later down the line.

Need help with a settlement agreement? Call 0330 912 8338 to talk to one of our experts.

What is a settlement agreement?

When an employer seeks to terminate an employment contract, they will often offer a settlement agreement. This agreement sets out the agreed terms for settlement of any potential claims between the employer and employee.

Such contracts can be negotiated and drafted with the advice and guidance of settlement agreement solicitors. Their experience of employment law and practice can ensure certainty for both parties that the agreement is signed off and the matter finally closed.

In most cases a settlement agreement is created as a means of giving the employee a set and agreed payment, in return for them agreeing to waive the right to pursue any further claim against the employer.

More often than not this marks the end of the employment and is a way for both parties to have certainty in the outcome.

Is a settlement agreement the same as a compromise agreement?

In short, a settlement agreement and a compromise agreement are the same thing. Settlement agreements used to be called compromise agreements, but their name was changed so as to take away the suggestion that the employee had to ‘compromise’ on their rights in every case to get a settlement from their employer.

How can our settlement agreement solicitors help you?

In order for a settlement agreement to be considered legally binding, the employee must consulted a solicitor and receive independent legal advice on the agreement they are being asked to sign.

Whether acting for employer or employee our team can help in whichever way suits you best – whether that means we lead negotiations, advise in the background or facilitate any conversations and arrangements which need to be made between the employer and employee to achieving a settled outcome. At these times it is important not to let the inevitable tensions between the parties cloud the issues and make things worse. We aim to keep things calm, focus on the main goal and work efficiently to that end. As any discussions and communication between the two parties might be used as evidence in further legal proceedings, it is important that all meetings are documented, and that the settlement agreement is correctly signed.

If you are an employer or employee looking for legal advice on a settlement or want to understand what happens if and when you sign a settlement agreement as an employee, we have the expertise and advice to help.

Settlement Agreement FAQs

Will I need a Settlement Agreement solicitor (as an employer)?

Some employers will have their own internal legal department or HR department that have the expertise to advise on, negotiate and draft a settlement agreement. Other employers may use an external adviser. Many of our clients are employers and our employment law and settlement agreement solicitors advise on all aspects of this process. Settlement agreements refer to a large number of statutes and regulations, so it is crucial to ensure that they are correctly drafted and up to date.

Will I need a Settlement Agreement solicitor (as an employee)?

The short answer to this question is yes, to advise you on the content of the agreement.

This is because, as an employee you have the protection of employment law regarding your relationship with your employer. A settlement agreement is in some respects a waiver which prevents you from being able to access that protection in the future, often in return for a sum of money agreed between you and your employer.

You need to receive independent legal advice before agreeing to this, to be sure that you understand the process and what it means for you and for the employer to be able to rely on the terms of the agreement.

It is important for employees to know that just because a settlement agreement has been offered, you do not have to sign it if you don’t want to and do not agree to its terms. You may wish to try and negotiate more favourable terms.

What are the benefits of settlement agreements?

There are benefits for both parties when settlement agreements are agreed and signed.

For the employee, a settlement agreement often entitles them to an agreed sum of money in return for agreeing to not further pursue a case against their employer. There are many reasons why such an agreement may be produced, some of which can arise from the employee being at fault while others may relate to an employer neglecting an obligation or being at fault. That is why it is so important to seek legal advice to understand if the settlement is fair.

For the employer, a settlement agreement allows them to close the book on an issue or complaint, safe in the knowledge that the employee in question cannot legally pursue any further action against them for the matters covered by the agreement.

Why do employers use settlement agreements?

Settlement agreements are beneficial in that they relieve employers of the potential disruption, cost and stress that can be caused by further action from disgruntled employees.

In short, a settlement agreement details the issues about which an employee can no longer make a formal or legal claim against their employer – giving the employer a legal and reasonable means of drawing a line under a situation which might otherwise escalate in terms of both cost and stress. Often this may include a payment, but it may see an otherwise bigger problem disappear.

Seeking the legal advice and support of settlement agreement solicitors, is important so that employers understand the financial and legal implications which frame their negotiations, and then to ensure that the correct procedure is followed and documentation produced to provide the best possible protection.

Can I ask my employer for a settlement agreement?

Usually it will be the employer who offers a settlement agreement. But, you can ask your employer for a settlement agreement if you want to go down that route. It will then be up to them to decide whether they want to agree a settlement with you and enter into a settlement agreement.

When might a settlement agreement be offered?

There are a range of reasons why a settlement agreement could be offered. Sometimes it may be necessary to record the settlement of a contentious issue in a way that allows the employment relationship to continue. Often it will relate to a termination of employment, whether that will be voluntary or forced through dismissal.

It’s important to recognise that every case is unique and independently handled by our employment law solicitors.

Some examples of when a settlement agreement might be offered:

• As part of the redundancy process, when an employee is being let go from their job.
• As a fast track method for removing an employee whose work is not up to scratch. This could also be referred to as a disciplinary settlement agreement.
• If a lack of skill or unforeseen sickness means an employee cannot carry out their role effectively.
• In the face of a working relationship breakdown, when employee and employer cannot work together.
• If a grievance has been raised by the employee against their employer.

These examples are not exhaustive, but form some of the most common reasons when settlement agreements might be implemented.

What is usually included in a Settlement Agreement?

A settlement agreement will normally include a payment by the employer to the employee as well as them giving their employee an agreed reference to help them progress their career elsewhere.  In exchange, the employee will agree to give up their right to bring a claim against the employer in relation to the issues detailed in the settlement agreement. On top of this, a settlement will usually include a confidentiality clause as part of the deal so that the employee can’t tell others about the settlement that they’ve agreed with their employer.

It’s important to recognise that every case is unique and independently handled by our employment law solicitors.

Some examples of when a settlement agreement might be offered:

• As part of the redundancy process, when an employee is being let go from their job.
• As a fast track method for removing an employee whose work is not up to scratch. This could also be referred to as a disciplinary settlement agreement.
• If a lack of skill or unforeseen sickness means an employee cannot carry out their role effectively.
• In the face of a working relationship breakdown, when employee and employer cannot work together.
• If a grievance has been raised by the employee against their employer.

These examples are not exhaustive, but form some of the most common reasons when settlement agreements might be implemented.

What happens if I don't sign a settlement agreement?

If you can’t negotiate terms and don’t sign a settlement agreement, then the situation probably remains as it was before the agreement was offered.

You may find that the employer chooses to take another course of action, or may readdress aspects of the agreement and present a new version for your approval.

What happens if I waive my employment rights?

When you sign a settlement agreement you waive the rights as specified in the agreement that you may otherwise hold under employment law, and agree to not pursue a case against the employer as outlined in the agreement.

This is an important decision and your employer will actually require you to consult and receive expert legal advice before signing an agreement.

What happens if a settlement agreement is breached?

If the employee is in breach of contract

If an ex-employee is found to be in breach of the terms of a settlement agreement, then the remedies available to their former employee will depend on the circumstances of and nature of their breach. For example, failing to return employer property by a set date will be dealt with in one way, while breaking the terms of the settlement in relation to confidential information being shared might lead the employer to pursue legal action, perhaps for an injunction and compensation.

If the employer is in breach of contract

If the ex-employer is found to be in breach of the terms of a settlement agreement, the employee may be able to seek an injunction for specific performance of the terms of the agreement and possibly claim damages.

What costs are involved with Settlement Agreements?

Where an employer requires an employee to seek advice relating to a settlement agreement, the employer will offer a fixed amount towards the employee’s legal fees. This contribution may not cover all of the legal fees involved in negotiating and finalising a settlement agreement.

We always work within the budgetary restraints of our client and taking account of the level of employer contribution and the scope of work involved.

Are settlement agreements subject to tax?

Payments of up to £30,000, as compensation for loss of office, can generally be paid without tax and national insurance deductions.

Such payments and the timeline in which they will be made should all be set out in any settlement agreements.

Having said that, the tax implications of a settlement agreement needs to be considered carefully as tax can have a huge impact on the amount that you receive, so this is something you should discuss with an expert before proceeding with any agreement.

What do I do if I need legal support?

If you are concerned with the action of your employer, or feel that you have been unfairly treated or dismissed, we can help to make sure that the information you receive and any agreement you are asked to sign are fair and protect you and your future interests.

If you are an employer and need advice on providing a settlement agreement, we can assist with early advise before any offers are made, as well as with negotiating, drafting and completing an agreement.

It is never too early or too late in the process to receive advice and support, with our expert team having worked with all manner of organisations both large and small with simple and more complex circumstances and situations.

Get in touch with us directly to find out more about exactly how we can help.

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Talk to our team

Call 0330 912 8338 to have a chat with our expert HR and Employment Team. They’ll be happy to talk through the process with you, explain what we do, and answer any questions you have. There’s no obligation.

Or email us with your query and we’ll help in any way we can.